Disputes Over Nursing Home Arbitration Agreements Flourish in Pennsylvania

In three recent Superior Court cases, binding arbitration agreements between nursing home facilities and their residents have been under scrutiny.

In Bair v. Manor Care of Elizabethtown, PA, LLC,[1] M. Sylvia Bair commenced a wrongful death and survival action as the Executrix of the Estate of Martha A. Edwards against Manor Care in which she alleged neglect and abuse of her mother during her stay in the facility, which ultimately caused her death. Manor Care filed preliminary objections to the complaint seeking to have the case referred to arbitration pursuant to a 2011 arbitration agreement executed by Ms. Bair on behalf of the decedent. Ms. Bair testified at her deposition that she completed admission paperwork on behalf of the decedent and the arbitration agreement was not explained to her. Ms. Bair further testified that she believed the arbitration agreement had to be signed to facilitate her mother’s admission to the facility. Ms. Bair signed the agreement on behalf of the decedent; however, no representative from Manor Care completed or signed the agreement on behalf of the facility. In denying Manor Care’s preliminary objections, the trial court looked to a 2009 arbitration agreement between the parties that was completed, signed, and dated. The court found that this was evidence that one could infer that Manor Care did not intend to be bound by the unsigned, undated arbitration agreement in 2011.

On appeal to the Superior Court, Manor Care argued that the lack of a signature by a facility representative does not render the arbitration agreement unenforceable. Ms. Bair argued that the parties did not agree on the material and necessary details of their bargain as there were blanks on the agreement that were intended to be filled in with the parties names and it was undated. Further, the fact that there was a line for the facility representative to sign and it was blank indicated that there was no mutual assent. The Superior Court agreed with the trial court and found that the arbitration agreement lacked essential terms such as the names of the contracting parties, the date of the agreement, and a brochure that was expressly made part of the agreement. By failing to sign the agreement, Manor Care did not consent to arbitrate any claims between it and Ms. Bair. Finally, the Superior Court found that the prior completed arbitration agreement was evidence that Manor Care typically consented to arbitration by completing the blanks and signing the agreement, which it did not do in 2011.

In Taylor v. Extendicare Health Facilities, Inc.,[2] the Executors of the Estate of Anna Marie Taylor brought a wrongful death and survival action alleging negligence in the care and treatment of the decedent while at Extendicare, which lead to her death. Extendicare filed preliminary objections to have the case moved to binding arbitration, which the trial court overruled finding that the arbitration agreement did not bind the wrongful death beneficiaries.

Extendicare appealed to the Superior Court and argued that since the decedent entered into an arbitration agreement, her beneficiaries were limited to claims that the decedent could have pursued during her lifetime and that all claims must be submitted to arbitration. The Superior Court found that a wrongful death action is a separate action belonging to the beneficiaries and therefore, an arbitration agreement not signed by the beneficiaries is not binding upon them. Thus, the wrongful death beneficiaries could pursue their claims in the Court of Common Pleas. Regarding the survival action, Extendicare argued that even if the wrongful death beneficiaries were not bound by the arbitration agreement, the Executors acting in the shoes of the decedent must be bound by the agreement. In ruling on this issue, the Superior Court looked to Pennsylvania Rule of Civil Procedure 213(e) and the wrongful death statute, which provide that wrongful death and survival actions shall be consolidated for trial to avoid a duplicative recovery.

Lastly, Extendicare argued that the Pennsylvania state law was preempted by the Federal Arbitration Act (FAA); however, the Superior Court agreed with the Executors and found that Pennsylvania Rule of Civil Procedure 213(e) was not intended to undermine the enforceability of arbitration agreements. In doing so, the Court found that there was nothing in the wrongful death statute or the FAA that precluded wrongful death and survival actions from “proceeding together in arbitration when all of the parties, including the wrongful death beneficiaries, agree to arbitrate.”[3] The ruling was further supported by Pennsylvania’s policy consideration regarding consolidating claims in order to avoid duplicative and inconsistent litigation.

The Superior Court affirmed the trial court’s ruling denying Extendicare’s preliminary objections to compel arbitration and stated that, “[i]n so holding, we are promoting one of the two primary objectives of arbitration, which is ‘to achieve streamlined proceedings and expeditious results.’”[4]

More recently, in Wisler v. Manor Care of LancasterPA, LLC,[5] the Executors of the Estate of Herbert C. Wisler brought a negligence claim against the nursing home, which allegedly resulted in the decedent’s death. Manor Care filed preliminary objections to compel arbitration pursuant to an arbitration agreement entered into by the Executors. At the time that the agreement was signed, the decedent’s son identified himself as the decedent’s power of attorney; however, he did not produce a copy of the power of attorney and could not produce a copy at his deposition. Therefore, the trial court found that he lacked the authority to enter into the arbitration agreement in the first instance, and thus, was not bound by the agreement.

On appeal to the Superior Court, Manor Care argued that the decedent’s son was bound by the arbitration agreement as he entered the agreement in his capacity as the power of attorney. The Superior Court found that Manor Care held the burden of proving that an agency relationship existed between the decedent and the decedent’s son, whether it be express or apparent. Moreover, Manor Care had “a duty to ascertain the nature and extent of the written power of attorney.”[6] In failing to establish either express or apparent agency of the decedent’s son at the time of signing the arbitration agreement, the court held that Manor Care could not compel arbitration in accordance with the agreement. In doing so, the Superior Court unequivocally stated that, “our decision should encourage parties seeking an agreement to arbitrate to ascertain the source of an agent’s authority before allowing the agent to sign an arbitration agreement on the principal’s behalf.”[7]

It is yet to be determined whether the issue of enforceability of binding arbitration agreements between residents and nursing homes will be heard by the Pennsylvania Supreme Court. Nonetheless, the recent case law has clarified the requirements of a nursing home when executing arbitration agreements with residents or residents’ family members.